develop TV 2 as the leading commercial national TV channel to be the leading owner of local TV companies

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1 page: 1 part: this is a-pressen Our business activities, A-pressen is a listed media corporation with employees and revenues of NOK 2.2bn. The Group has operations in Norway in newspapers, printing plants, TV and electronic media. In addition, A-pressen has embarked on investments in newspaper and printing operations in Russia. Ambition and main goals, A-pressen aspires to be the leading owner of local media in Norway in addition to being a major and strategic owner of commercial TV. The Group s most important goals are therefore: to ensure and strengthen the strategic position of local newspapers to help consolidate and continue to develop TV 2 as the leading commercial national TV channel to be the leading owner of local TV companies, The Group will continue to expand its involvement in electronic media by utilizing the strong market position of the local newspapers. Its goal is; that A-pressen s websites are the preferred portal to Net information and Net services in their defined markets, A-pressen aspires to be an important media player in Russia., A-pressen will focus on free cash flow as a goal of the Group s value. The goal is to have a value-adjusted capital cash return of 11 per cent before taxes within Strategy, A-pressen will grow through investments and acquisitions and will carry on and continue to develop strategic alliances., A-pressen will substantially improve the profitability of existing operations by focusing on the advertising market as its most important source of income and will make adaptations in order to strengthen market development and reduce costs., A-pressen will focus on developing the competencies of its managers and employees., A-pressen will give the shareholders a competitive dividend on the capital, A-pressen will have a cash return of 11 per cent of adjusted capital before taxes within 2002, A-pressen will strengthen local media as a player in the communities, A-pressen ASA,,,,, Newspaper and printing TV Electronic media Russia,, Local newspaper,, 46 TV 2 AS (33%), City newspaper 3 TVNorge AS (49%) Printing, plants, 22 Local TV stations 7 See chart of companies on the inside of cover.

2 page: 2 part: this is a-pressen, Key figures (MNOK) Operating revenues Operating profit Associated companies Profit/loss before taxes and minorities Net profit/loss Operating margin (%) Balance sheet Total fixed assets Total current assets Total assets Shareholders equity Minority interests Long-term liabilities Current liabilities Total liabilities and shareholders equity , Circulation majority-owned newspapers Number of employees in Group Number of man-years in Group Share related key figures Share price as per 31 Dec. (NOK) Market capitalisation (MNOK) FINANCIAL CALENDAR (with reservations for possible changes) General Meeting 11 May 2000 Presentation of 1st quarter 11 May 2000 Presentation of 2nd quarter 10 August 2000 Presentation of 3rd quarter 1st November 2000 % Development of A-pressen vs. all-share index since stock exchange listing in October 1998 Nov. 98 Dec. 98 Jan. 99 Feb. 99 Mar. 99 Apr. 99 May 99 June 99 July 99 Aug. 99 Sept. 99 Oct. 99 Nov. 99 Dec. 99 Jan. 00 Feb. 00 A-pressen All-share Index For definitions see shareholder relations and analytical information on page 49.

3 page: 3 part: this is a-pressen Events 1999 February, The Finnish media group Sanoma increases its holding in A-pressen from 13.2 per cent to 20.0 per cent March, Østlands-Posten in Larvik buys the newspapers Jarlsberg and Porsgrunns Dagblad. The purchase is an expression of A-pressen s ambition to be a major newspaper player in Vestfold and Telemark, Media Øst Trykk makes a NOK 15 million agreement with MAN Roland concerning compensation for the delayed delivery of equipment to the printing plant at Lillestrøm June, Avisa Sogndal closes down, A-pressen Eastern Europe (AEE) opens printing plant in Ekaterinburg, Russia July, Sanoma increases its stake in A-pressen to per cent, A-pressen ups its holding in Hamar Media to 20.3 per cent and Hamar Media becomes an associated company August, AEE buys into the three times weekly newspaper Nizhegorodskij Rabochij (44 per cent) in Nizhnij Novgorod, Russia, New Media Science, of which A-pressen owns 23 per cent, is merged into Linné Group AB. Linné Group later changes its name to Cell Network. A-pressen owns 3.6 per cent of the company following the merger,,

4 page: 4 part: this is a-pressen October, A-pressen buys 20.2 per cent of the shares of Norsk Avisdrift, which inter alia publishes the free newspaper Osloposten. A-pressen s investment is a response to the competition from Avis1 in Oslo and Akershus. Osloposten enters A-pressen s advertising pool in the region, TV 2 and TVNorge agree to terminate their GRP (income/viewer guarantee) agreement. TV 2 compensates TVNorge with a cash payment of NOK 335 million, plus NOK 30 million in the form of advertising, Østlands-Posten starts the newspaper Øyene for distribution in the Tjøme/Nøtterøy region, AEE buys into the weekly newspaper Peterburg Ekspress (33 per cent) in St. Petersburg November, Media Øst Trykk enters into a five-year printing agreement with the newspapers Finansavisen, Nationen, Klassekampen and Vårt Land. The agreement has an annual gross value of NOK 35 million, A-pressen increases its holding in Norsk Avisdrift to 33.6 per cent December, The Norwegian Media Ownership Authority orders A-pressen to dispose of all its shares in Lofoten Kommunikasjon, publisher of the newspaper Lofot-Tidende. The decision is being appealed, A-pressen enters into a strategic partnership with JobMatch Norge and buys 20 per cent of the shares in the company. JobMatch Norge aims to be a leading player in the Norwegian job listing market on the Internet. A-pressen buys further 20 per cent in February 2000, The newspaper Årdal og Lærdal avis is sold. A 10 per cent stake is bought in Sogn Avis. Sogn Avis joins the newly established advertising pool Sogn og Fjordane Samkjøyringa together with Firda and Firdaposten from 1 January

5 page: 5 part: the c.e.o. view point Local media have a strong position, Local media are under pressure, in part because of social trends amplified by technological change. I m happy to report that newspapers nonetheless still have just as many readers as before, and that viewership of local TV is rising. This demonstrates that local media are filling a need and are hard to replace. However, future newspaper content demands will be challenged by the fact that digital distribution of content is both quicker and cheaper than paper distribution. A-pressen is therefore using more resources than ever before on editorial content. I believe that it is only by committing ourselves to quality journalism and appropriate editorial methods and approaches that we can keep our readers and viewers., We announced a consolidation plan in 1999 and 2000 in the wake of poor Group operating results. Thanks to outstanding efforts throughout the entire A-pressen organization, the Group performed better in 1999 than we dared to imagine. This calls for collective praise for everyone who contributed. Cooperation has been good between the management and employees on reorganization and streamlining of operations, and most newspapers have implemented the changes within the time limits. One significant bonus of the process is that our insight into the local competitive situation has increased, and this will have an impact on our future revenues., This increased understanding of the market also makes it easier to continue our efforts to identify new areas in which we can extract economies of scale from the Group organization and utilize technology to increase productivity, which is absolutely necessary if we are to have adequate resources for products and marketing., We failed to achieve our goal of having all the TV companies break even towards the end of 1999, but the channels are performing better and the improved results will continue in 2000., The consolidation process is now giving way to aggressive development of A-pressen s operations. In the course of 2000 we will be taking major steps to generate new value and confirm our position as the leading owner of local media in Norway. At the same time we will continue the cautious development of operations in Russia and establish international positions and alliances in Internet technology., A-pressen enjoys permanent customer relations with nearly a third of all Norwegian households, our newspapers are read by 1.4 million people and the number is growing tune into our TV broadcasts weekly. Thousands of advertisers use our media daily. The establishment of websites by half of the local papers has been well received and shows that newspapers are powerful branded products that enjoy great trust as suppliers of content., Based on this market position, A-pressen s Internet operations will be rapidly expanded in 2000 in alliance with our partners. This will be a new challenge to the organization: As we continue to develop newspapers and TV we have to have the ability to think multimedia. We can with a reasonable degree of certainty conclude that part of our newspaper revenues will be reduced as a result of digital distribution. Local TV also needs to increase revenues. This means that our traditional media will need new revenues to maintain quality and volume. We have to do this by refining our value chain: content, marketing and distribution., The TV 2 Group has been through a difficult year, impacted by the investment in and agreements with TV Norge. The partnership agreements have now been ended at a cost that weighs heavily on the Group s 1999 result. The TV 2 channel has had a good year, further strengthening its position as the leading brand-name product in Norway. Negotiations on the terms for a new licence from 2003 will affect the channel s framework conditions. But the TV 2 Group s most import growth area in the years to come will be the Internet and interactive services. The channel s attributes make it particularly suitable for developing and marketing these services, and it is already in the process of becoming a leading player, with important partnership relations with other players. Alf Hildrum CEO

6 Report of the board of directors

7 page: 7 part: report of the board of directors, Operations improve TV drags down Two main challenges left their mark on A-pressen s operations and results in The Group reduced its newspaper costs in order to be more resilient in dealing with the expected downturn in the advertising market. These efforts have been successful thanks to the broad involvement of the press group. A-pressen has been proactive in resolving the problems associated with the partnership agreement between TV 2 and TVNorge. The solution, together with TVNorge s operating loss, weighs heavily on TV 2 s, and thereby A-pressen s, profit and loss account for the year. In 1999, A-pressen became the leader in local content on the Internet. Twenty-one of the Group s newspapers have their own website. A-pressen has focused on the development of the newspapers position on the Net and reduced the number of other Internet activities. As 2000 opens the Internet is A-pressen s most important growth area. A-pressen bought and established several small local newspapers in 1999 in order to further strengthen the marketing position of its newspapers. The Group dealt with structural changes on the marketing side inter alia by the purchase of ownership interests in Norsk Avisdrift (Osloposten) and the founding of the twice weekly newspaper in Halden. In addition, the Group has launched several new advertising products. To strengthen its competitiveness and position, Romerikes Blad became a morning newspaper published seven days a week. One of the goals of the "Good and Efficient Newspaper" project has been to reduce the number of man-years in continued operations by 10 per cent from the beginning of 1998 until the end of Until the end of 1999 the number was reduced by almost eight per cent, and the 10 per cent reduction will be reached in the course of Cooperation between the management and employees on downsizing has been good, which has been important for reducing the impact on those affected, and for retaining A-pressen s market clout. Through adjustments on the equipment end Media Øst Trykk has managed to stabilize production and thus enhanced its competitiveness. The operating concepts for the local TV stations were substantially changed in Extensive programmes both on the cost and revenue side have contributed to improved profitability and a certain amount of success in the advertising market. A-pressen s first newspaper and printing investment in Russia is off to a promising start and has captured significant market shares in the regional market. The potential for growth will be substantial if the economic and political situation in Russia improves. Results Operating profits increased by NOK 60m to NOK 97m in In the third period alone, operating profits increased by NOK 46m. The profit before tax and minority interests increased by NOK 14m to NOK 1m. The result after tax came to a loss of NOK 17m against a loss of NOK 11m in Cash flow from operations (gross operating result minus operating investments) came to NOK 144m, an increase of NOK 86m from last year. Besides improved profitability, the increase is attributed to the fact that business investments were reduced from,

8 k k page: 8 part: report of the board of directors NOK 125m in 1998 to NOK 90m in The cash flow statement shows a net change in the cash balances through the year of minus NOK 71m. Long-term debt was reduced by NOK 89m, and net cash flow from investment activities amounts to minus NOK 152m. Group revenues in 1999 came to NOK 2 228m, down 1.8 per cent from last year. Among other things, this is because Dagsavisen was included in the comparison basis for Revenues of continued operations grew 2.4 per cent. The Group s total operating costs came to NOK 2 132m, 4.5 per cent lower than the year before. The growth in operating costs was 0.6 per cent for continued operations. Advertising revenues in 1999 were on a par with last year, but the volume was down 4.5 per cent from last year for continued operations. Personnel costs were marginally lower than in 1998 for continued operations, but this figure also includes downsizing costs. The newspapers received press subsidies totalling NOK 55m in 1999, against NOK 87m the year before. The 38 per cent decline is partly due to the sale of Dagsavisen, and partly due to reduced appropriations. Press subsidies now make up 2.5 per cent of A-pressen s revenues, against 3.9 per cent in Of the cost of materials, NOK 318m, newsprint purchases accounted for NOK 157m, against NOK 155m in The increase in newsprint costs was thus 1.8 per cent. The share of the result from associated companies was reduced by NOK 36m. This is because of the TV 2 Group s financial losses stemming from its stake in TVNorge. A-pressen concluded its Y2K investments in Thanks to thorough preparations, the rollover was carried out without significant problems. After several years of heavy investments in maintenance and development of plant and equipment, operating investments in 1999 were substantially reduced. The Group s net operating investments came to NOK 90m (NOK 125m). Strategic investments amounted to NOK 80m (NOK 39m). The Group s equity ratio increased from 37 per cent to 39 per cent at 31 December Liquid reserves are NOK 313m and net interest-bearing debt is NOK 596m. The Group s syndicated drawing rights have a framework of NOK 750m with a duration of six years. The framework will be adjusted downwards by NOK 50m in 2000, thereafter by NOK 100m in 2001 and The loan will be terminated in In addition, the Group has a NOK 100m bank overdraft agreement renewed annually. Business areas Local newspapers 1999 saw considerable structural changes in the advertising market, which, among other things, led to a much sharper competitive situation for A-pressen s largest newspaper, Romerikes Blad. A-pressen s investment in and cooperation with Norsk Avisdrift (Osloposten) is a means of meeting the new competitive situation in the Oslo market. To strengthen the Group s pool product in Østfold, A-pressen/Media Øst founded the newspaper Halden Dagblad. The newspaper is distributed free in the establishment phase. In March A-pressen/Østlandsposten purchased the newspapers Jarlsberg Avis and Porsgrunn Dagblad. In addition, the local newspaper Øyene was established on Nøtterøy island/tjøme in October. The investments are an expression of A-pressen s ambition to be a major media player in Vestfold and Telemark. The Norwegian Media Ownership Authority has intervened in two acquisitions A-pressen made in The Authority has ordered A-pressen to sell its shares in Lofoten Kommunikasjon, publisher of Lofot-Tidende, and has blocked acquisition of the shares of Brønnøysund Avis og Bokhandel. A-pressen has appealed both decisions. Operating profit for the local newspapers is NOK 112m, a six per cent improvement. Circulation revenues increased by three per cent, while total circulation dropped by or 1.1 per cent. The reduction occurred mainly in Nord-Norge, Østfold and Romerikes Blad. The latter s decline is mainly due to the reduced quality of distribution. Changes in the other newspapers were small. Advertising revenues show a 0.5 per cent growth rate for continued operations. Advertising volume was reduced by 4.0 per cent. Personnel costs are at last year s level for continued operations. This includes the cost of downsizing and extra costs at Romerikes Blad in connection with the changeover to a morning newspaper. Personnel costs grew slowly in the first period, and showed a declining trend in the second and third periods. Distribution costs increased substantially in 1999 because of the change in the distribution system, increased postage rates and higher newspaper carrier wages. City newspapers The city newspapers group Storbyavisene consists of Bergensavisen, Fremtiden and Rogalands Avis. A-pressen s goal of gradually reducing its ownership stakes in these newspapers remains in place. Negotiations carried out in 1999 were not successful. Fremtiden has changed its strategy and concept and is now a purely local newspaper for Drammen under the new name DrammensAvisa. Both Bergensavisen and Rogalands Avis are carrying out major cost adjustments. The operating loss for Storbyavisene came to NOK 12m, a 47 per cent improvement. This is because Dagsavisen is no longer a part of the Group. For the three remaining major newspapers losses increased by less than NOK 3m. Press subsidies were reduced by nearly NOK 6m ( per cent). The Storbyavisene Group brought down A-pressen s operating profit by NOK 6m in 1999 (against NOK 17m in 1998). This includes the operating result from printing and property operations.

9 k page: 9 part: report of the board of directors Circulation revenues increased by 3.5 per cent, while volume declined by 2 046, or 3.4 per cent. Advertising revenues were 4.1 per cent lower than last year, and the negative trend deepened through the year. Operating costs were on the same level as the previous year. Personnel costs were reduced by 1.5 per cent. Printing Media Øst Trykk in Lillestrøm is the Group s main printing plant. The printing plant is highly competitive and has in the past year managed to establish high production stability and substantially increase capacity utilization at the same time. In 1999 Media Øst Trykk signed several new printing contracts, including five-year agreements with Finansavisen and Klassekampen. The agreements with Vårt Land and Nationen were extended by four years, while the agreement with Dagsavisen was prolonged by two years. The printing plant has installed a fourth printing tower, thereby further increasing its capacity. The business area Printing increased its operating profit by NOK 32m to NOK 46m. Media Øst Trykk s operating profit is NOK 33m better than last year. The company has taken to income NOK 5m from the printing press supplier as compensation for problems in recent years, while operating disruptions in 1999 were compensated with NOK 6m from the suppliers. The improved result is due to increased capacity utilization and greater production stability in the last half year. TV A-pressen has a dominating position as the owner of commercial Norwegian TV channels. The most important investment is the Group s ownership interest of 33.2 per cent in TV 2. The TV2 investment accounts for 24 per cent of the Group s booked balance sheet at 31 December. TV 2 is Norway s biggest and most important commercial TV channel. TV 2 has a 64 per cent share of the TV advertising market in Norway, and enjoys a solid position among viewers as the number two channel after NRK 1. TV 2 increased its audience in 1999, further reducing NRK s lead in the national ratings. Among younger viewers (12 34 years) TV 2 is clearly the most popular channel in Norway. As a branded product TV 2 continues to be very strong and has been ranked for the second year in a row as the second strongest brand name in Norway. TV 2 also sees considerable potential in the development of the Internet and text TV through subsidiaries. The convergence and synergy of PC technology, telecommunications and the TV industry offer TV 2 exciting opportunities in the future. The TV 2 Group posted in 1999 a loss after taxes and minority interests of NOK 58m, down NOK 144m from The TV 2 channel posted an operating profit of NOK 174m, down NOK 20m compared with the previous year. After a weak opening in 1999 the final period was very good in terms of income. Revenues increased from NOK 1 152m in 1998 to NOK 1 232m in Based on income trends in the first period, TV 2 carried out cost-cutting measures totalling altogether NOK 45m. TV 2 s share of TVNorge s result, including amortization of goodwill, lowered the TV 2 Group s result after taxes by NOK 81m. In addition, the one-time charge relating to the termination of the revenue and viewer guarantee came to NOK 79m. TVNorge therefore impacted TV 2 s result by altogether NOK 160m, against NOK 73m in A-pressen s share of TV 2 s loss total NOK 19m. With the addition of NOK 23m in goodwill amortization, A-pressen s consolidated result was lowered by NOK 42m. In relation to 1998 this entails a loss of NOK 48m. The local TV companies had a combined operating loss of NOK 12m. With the addition of goodwill amortization of NOK 3m, the overall charge to the Group was NOK 15m. This is an improvement of NOK 10m compared with last year. Cash flow was minus NOK 6m. Operating revenues increased in 1999, though less than expected. TV Romerike, TV Telemark and TV Tromsø reported positive trends. TV Romerike posted an operating profit in Operating costs were reduced by 10.5 per cent for continued operations. Costs were reduced to a satisfactory level in most stations in the course of Russia A-pressen s investment in Russia is channelled through A-pressen Eastern Europe AS (AEE), which is 65 per cent owned by A-pressen ASA and 35 per cent by EBRD/NORUM. AEE invested in four newspaper and printing projects in Russia in The company has ownership stakes in two printing plants, OGF Ekaterinburg and OGF Nizhnij Novgorod, and the newspapers Peterburg Express and Nizhegorodsky Rabochy. The investments were made within a framework of NOK 14m. A-pressen s investments in Russia are based on an expectation that the country s economy will eventually stabilize and gather strength and that continued development of the private sector will also gradually improve personal finances. Newspaper investments are also built on the belief that regional media in strong and populous regions will strengthen their position at the expense of central media. A-pressen Eastern Europe s charge on the consolidated account was NOK 5m in 1999, of which NOK 1.6m is the share of the result from projects in Russia. Electronic media Investments and operational focus in electronic media were concentrated on fewer projects in A-pressen Nett was founded as a development company for the newspapers Net editions and will now serve as a basis for further expansion. A-pressen took an active part in the restructuring of Digital Hverdag, which after its merger with New Media Science and subsequent mergers, is part of the Swedish stock exchange-listed company Cell Network. The value of the investment has increased significantly in recent months.

10 JAN KR. BALSTAD, CHAIRMAN OF THE BOARD TERJE MOE GUSTAVSEN ÅSHILD M. BENDIKTSEN ALF HILDRUM, C.E.O.

11 SVEIN HAUGSVOLD EVA M. MEIDAL JAAKKO RAURAMO JOHNNY HELGESEN JON H. PRAN BRIT RENNGÅRD JORUNN HENRIKSEN

12 k page: 12 part: report of the board of directors A-pressen has purchased 40 per cent of the shares in JobMatch Norge. The company has positioned itself in the market for databased job listings, and has shown promising development following its launch in December. JobMatch will be linked to the local newspapers Net ventures. The business area Electronic media represents a NOK 5m charge against the consolidated account, with the now defunct Lokalnett accounting for most of this. In addition, net financial items included c. NOK 7m in share write-downs. Share capital and shareholder relations No capital increases were undertaken in At the ordinary general meeting on 10 May 1999 the Board was authorized to increase the share capital by up to NOK 2m in connection with a private placement directed at group employees. The authorization was not used in 1999, but the Board is considering using its authority in the first half of At the same general meeting the Board was also authorized to increase the share capital by up to NOK 10m in connection with the financing of projects and acquisitions in The authorization was not used in A-pressen has three large active owners: Fagbevegelsens Investeringsselskap AS per cent, Sanoma WSOY AS per cent (the Finnish media group Sanoma) and Møller-gruppen per cent. At the start of 1999 Sanoma owned 13.2 per cent, so it more than doubled its equity interest over the course of Sanoma s chief executive has been a member of the board since The other large owners increased their holdings marginally through The 10 largest shareholders owned per cent of A-pressen s shares at 31 December The 20 largest shareholders are otherwise listed in note 18. At the end of 1999 A-pressen s share price was NOK 145. The share price rose 41 per cent in Highest closing price in 1999 was 155 and the lowest was 102. At 31 December 1999 A-pressen had shareholders, against the year before. Personnel and organization At the end of 1999 the Group had employees (2 400 man-years), not counting newspaper carriers. In 1998 the Group had employees (2 656 man-years). The change is due to workforce reductions, better production control in Media Øst Trykk plus the fact that Dagsavisen is no longer part of the Group. Compared with 1998, the number of man-years for comparable companies was reduced by 141 in Significant resources are spent on training and development of managers and employees in A-pressen companies. The Group s joint management and personnel policies are followed up locally and centrally through a number of measures. The employee representation system works well. The corporate Board has decided that A-pressen s operations will join the employer part of the Norwegian Newspaper Publishers Association from 1 January Employees contractual rights will be continued in transitional agreements. The decision means that A-pressen s collective bargaining association, A-pressen s Tarifforening, will cease to exist. The working environment is regarded as good and the rate of absence due to illness is normal. For the Group as a whole, eight insurance cases worth a total of NOK have been reported. Four involve accidents and four occupational injury. The Board wants to thank all employees for their outstanding work in the past year. The external environment The energy source in the production of newspapers is electricity. Factor inputs in the production of newspapers are mainly newsprint, printing plates, films, inks and various chemicals. Waste paper and leftover paper are delivered to paper recycling centres. Printing plates are delivered to metal recycling facilities. Film, inks and other chemicals are treated as special waste before destruction. In recent years the companies have taken into use detergents less injurious to health. Some printing plants have switched to vegetable detergents. Printing inks contain very little toxic substances. Production pollutes in the form of dust and noise. Spot extractors are being installed for dust. Noise is being reduced with noisedampening premises and personal protection in form of ear protection. Strict internal control both with respect to individual employees and machinery reduce accident risks. Health, safety and environment work in individual companies is very important. Media Øst Trykk has its own discharge permit and reports annually to the Norwegian Pollution Control Authority. Media Øst Trykk has also installed its own energy recycling system. The municipalities take care of collecting paper (the newspapers) for recirculation. Environmental protection is a priority area in A-pressen. It is important in relation to the general environment, local community, employees and our customers. A-pressen ASA The Board proposes that no dividend be paid for the 1999 financial year. Long-term, the goal is to pay a dividend in line with what is common in the industry. The Board believes that the payment of a dividend must be in proportion to the liquidity situation and future investment needs. The Board presents the parent company s and the consolidated accounts for The presumption of continued operations underpin the accounts. The Board proposes to the general meeting that A-pressen ASA s NOK 59m profit be transferred to other equity capital. A-pressen ASA s distributable equity capital amounted to NOK 302m at 31 December The Board is not aware of factors occurring after the close of the financial year that will have a bearing on the annual accounts. Jan Kr. Balstad Eva M. Meidal Svein Haugsvold Johnny Helgesen Jorunn Henriksen

13 k page: 13 part: report of the board of directors A-pressen ASA owns, directly or indirectly, 45 newspapers, eight printing companies, 33.2 per cent of the shares in TV 2 ASA, seven local TV stations, 65 per cent of the shares in A-pressen Eastern Europe and a number of smaller companies. In addition, the parent company has ownership interests in four other newspapers. The Group is made up of 117 subsidiaries and 23 associated companies operating throughout Norway and in certain cities in Russia. The parent company provides a number of joint functions for Group companies, including training, purchasing, marketing services and capital management. The group administration is in Oslo, and had at the end of the year 27 employees. Operations and activities of the parent company are financed through an administration fee paid by subsidiaries, and group contributions from the subsidiaries that do not receive press subsidies. In addition to own resources, the parent company utilizes special competencies possessed by the subsidiaries and associated companies. The working environment is good and sickness absenteeism is minimal. A-pressen ASA registered no significant accidents or injuries in The health, safety and environment survey conduced in 1999 produced positive feedback. Efforts were made to remedy negative feedback received during the survey. Total remuneration of the board, corporate assembly, CEO and auditor is reviewed in note 3 in the parent company s annual accounts. The same note states how many shares are owned by each member of the board, corporate assembly, the auditor and CEO. Changes in accounting policies are set forth in note 1 of the consolidated accounts. Future prospects Norway is expected to see an increase in private consumption in 2000 and that is good news for the media industry. Quick Internet-based technological changes are, however, creating uncertainty about the impact on the various media, and a general feature is that dominating market players within both newspapers and TV are challenged by new competitors. The Board sees limited opportunities for considerable growth in the traditional operations in Norway, and assumes the most important growth areas for A-pressen in the next couple of years are Internet-based services and investments in other countries. In 2000 A-pressen will integrate certain aspects of newspaper and TV operations with Internet activities. Investments in the business area will be substantial and A-pressen assumes interactive services will see considerable growth in revenues in the years to come. In 2000 the investments will partly be charged to the operating account. A-pressen wants to establish a management system that in the best way possible stimulates and reflects the development of added value in the companies, business areas and Group as a whole. In the future, A-pressen will increasingly focus on free cash flow as a measuring concept and cash flow return of the capital invested and bound up in the Group. The goals for the individual operations will reflect the shareholders return requirements in a better way than today. Decisions by the authorities in 2000 may change the operating conditions for A-pressen s activities. TV 2 will be negotiating a renewal of its license. The daily press committee will forward its recommendations this spring concerning the VAT exemption on circulation and press subsidies. The government has notified its intention to increase the VAT base in a report to be submitted to the Storting in the spring of Changes in these framework conditions could affect the strong position of the daily press in the Norwegian media market. The circulation market is somewhat more unstable than previous years, and a continued slow decline in local newspaper circulation probably has to be expected. A-pressen assumes price inflation in line with ordinary price trends. The advertising market was unstable in early A-pressen expects continued growth in TV and Internet sales, but a slight decline in newspaper sales. The labour market is tight, and competition is great in the media and IT industries for the most qualified employees. A-pressen therefore assumes increased pressure on personnel costs. The newspapers operating investments are expected to be considerably lower than in previous years, i.e. on a level with 1999 or lower. In 2000 most newspapers will have the full effect of the personnel reductions carried out over the course of Both the local newspapers and major city newspapers are expected to deliver improved financial results on Media Øst s printing plant has been upgraded, which increases the capacity of operating stability. Major longterm contracts have been signed. The result for the printing plants in 2000 is expected to be in line with TV 2 s investments could negatively affect A-pressen s overall result in 2000 too. TV 2 s other operations are expected to perform well. The company s potential for growth in interactive services is substantial, with corresponding opportunities for value development. The performance of the local TV stations towards the end of 1999 gives reason to believe that the business area will contribute positively to the Group s cash flow in Assessments of the advertising market in 2000 vary greatly, and the financial result for A-pressen similarly uncertain. A-pressen s overall result for 2000 is nevertheless expected to improve considerably. Terje Moe Gustavsen Brit Renngård Jaakko Rauramo Jon H. Pran Åshild M. Bendiktsen Alf Hildrum

14 Accounts

15 page: 15 part: accounts Accounts The Group A-pressen, A-pressen ASA, Profit and loss account 16 Balance sheet 17 Cash flow statement 18 Accounting policies Sales and purchases of subsidiaries 21 Notes Value added statement 35 Profit and loss account 36 Balance sheet 37 Cash flow statement 38 Notes Auditor s report 46 Statement by the Corporate Assembly 46,,

16 , page: 16 part: accounts Profit and loss account A-pressen Group (NOK 1 000) Notes Operating revenues Circulation revenue Advertising revenue Printing revenue Government subsidies Other operating revenues Total operating revenues Operating expenses Cost of materials Salaries, wages and other personnel expenses 4, Other operating and administrative expenses Ordinary depreciation Bad debts and guarantees Loss from sales of shares Total operating expenses Operating profit Share of result from associated companies Financial items Financial income Financial expenses Net financial items Profit/ loss before taxes and minority shareholders Taxes Minority shareholders stake Net profit/ loss Earnings per share (in NOK) Average number of shares Number of shares at end of year

17 , page: 17 part: accounts Balance sheet A-pressen Group (NOK 1 000) Notes 31 Dec Jan Jan. 98 ASSETS Fixed assets Goodwill and other intangible assets Deferred tax assets Building sites and buildings Machinery and plants Moveables, fixtures and office machines Other shares Shares in associated companies 12, Long-term receivables Total fixed assets Current assets Stock-in-trade Trade receivables Other short-term receivables Cash and bank deposits Total current assets Total assets SHAREHOLDERS EQUITY AND LIABILITIES Shareholders equity Share capital ( shares per NOK 20) Other equity capital Minority interests Total shareholders equity Long-term liabilities Net pension obligations Deferred tax liabilities Other long-term debt Total long-term liabilities Current liabilities Bank overdraft Trade creditors Taxes payable Payable VAT, social security, tax withholdings, etc Provisions for dividend Other short-term debt Total current liabilities Total shareholders equity and liabilities Jan Kr. Balstad Eva M. Meidal Svein Haugsvold Johnny Helgesen Jorunn Henriksen Terje Moe Gustavsen Brit Renngård Jaakko Rauramo Jon H. Pran Åshild M. Bendiktsen Alf Hildrum

18 , page: 18 part: accounts Cash flow statement A-pressen Group (NOK 1 000) Cash flows from operating activities Profit/ loss before taxes and minority shareholders Taxes paid for the period Ordinary depreciation Profit/ loss on and write-down of fixed assets and shares Profit/ loss on associated companies Change in stocks, debtors and creditors Change in other accrual items Items classified as investing and financing activities Net cash flow from operating activities (a) Cash flows from investing activities Proceeds from sales of fixed assets Purchase of fixed assets and goodwill Proceeds from sales of shares and units Purchase of shares and units Proceeds from sales of other investments Purchase of other investments Net cash flow from investing activities (b) Cash flows from financing activities New long-term debt New short-term debt Repayment of long-term debt Repayment of short-term debt Decline/ increase in bank overdraft Interest paid Incoming payment of equity capital Dividends received from associated companies Dividends paid Net cash flow from financing activities (c) Net change in cash flows through the year (a+b+c) Cash balances at beginning of year Cash balances at end of year The Group uses the indirect method for presenting its cash flow statement in accordance with the Preliminary Norwegian Accounting Standard for Cash Flow Statements. The indirect model shows gross cash flows from investing and financing activities, while the accounting result is reconciled against net cash flow from operating activities.

19 page: 19 part: accounts Accounting polices A-pressen Group General The consolidated accounts for A-pressen ASA and its subsidiaries are rendered in accordance with Norwegian accounting laws and generally accepted accounting practice, and are based on the fundamental principles of historical cost, comparisons, continued operations, congruence and prudence. Consolidation policies Consolidation of subsidiaries The consolidated accounts include A-pressen ASA and subsidiaries in which A-pressen ASA has a controlling interest. Normally, this will involve companies in which A-pressen either directly or indirectly via subsidiaries owns more than 50 per cent of the voting shares. The consolidated accounts are prepared according to the acquisition method and show the Group as a unit. In the consolidated accounts, all outstanding accounts and intercompany transactions are eliminated. Profits arising from transactions between companies in the Group are also eliminated. The cost price of shares in subsidiaries is eliminated against shareholders equity at the time of acquisition. Added value beyond the underlying equity in subsidiaries is distributed to the assets to which the value added is connected. The part of the cost price which cannot be ascribed to specific assets represents goodwill. Goodwill is included in the consolidated accounts as an intangible asset and is amortized using the straightline method over its estimated economic lifetime, though by at least 5 per cent per year. The book value of goodwill is written down if the actual value is lower and the decline in value is not assumed to be of a temporary nature. For subsidiaries in which A-pressen ASA does not own 100 per cent of the shares, the other shareholders share of equity are shown in the balance sheet as minority interests under the Group s shareholders equity. The minority shareholders share of the profit/ loss after tax is shown on a separate line in the profit and loss account. Associated companies Stakes in companies in which the Group has considerable, but not decisive influence, are treated according to the - equity method. Normally, this will involve companies in which the Group owns between 20 and 50 per cent. This means that the Group s share of the profit/ loss for the year after tax and depreciation of any value added are posted on a separate line in the profit and loss account. Value added in the associated companies is treated according to the same principles as those for consolidating subsidiaries. In the consolidated balance sheet, shares in associated companies are classified as fixed assets and are entered with the Group s share of the company s shareholders equity adjusted for added value. Sales/ purchases of subsidiaries and associated companies Sales and purchases of subsidiaries and associated companies are included in the consolidated accounts for the part of the year they have been a part of or are associated with the Group. Valuation and classification policies Advertising, non-subscription and subscription sales revenues Advertising income is reduced for given discounts. Newspaper subscriptions are invoiced in advance. The sale of goods is taken to income at the time of delivery. Prepaid subscriptions are therefore accrued in the balance sheet as current liabilities. Non-subscription sales are reduced by the cost of returned newspapers. Commissions on sales are treated as other operating costs. Press subsidies Press subsidies are distributed according to criteria in the Regulations of 7 November 1996 relating to production subsidies for daily newspapers, with later amendments of 17 February 1997 and 22 January The purpose is to promote and maintain a differentiated press in Norway. The main criteria for receiving press subsidies is that the newspaper must have an editor-in-chief and contain general news and current affairs coverage. Press subsidies are granted to all newspapers with a circulation of between and copies, and to newspapers that are not the largest in their place of publication, providing they fulfil the criteria in the Regulations. The press-subsidy programme is managed by the Ministry of Cultural Affairs via the National Media Authority. Newspapers apply for press subsidies each year and the funds are distributed on the basis of the Storting s appropriations based on the previous year s circulation of the newspapers that are entitled to subsidies. Press subsidies are paid quarterly, and are taken to income in their entirety the year they are received. Principals for charging to profits A cost is charged to profits at the time it has accrued. Received legal actions are charged to profits if the loss can be quantified and is more likely to be incurred than not. Assessment of assets and liabilities Goods circulation-related receivables and debts are classified as current assets and current liabilities, respectively. Assets and liabilities not connected with goods circulation are classified as current assets and current liabilities if they fall due for payment within one year after the date of the closing of the accounts. Other assets and liabilities are classified as fixed assets and long-term debt, respectively. The first year s repayment of long-term debt is classified as long-term debt. Trade receivables Trade receivables are valued at nominal value at 31 December 1999 less provision for future foreseeable loss.

20 page: 20 part: accounts Accounting polices A-pressen Group Stock-in-trade Stock-in-trade consists mainly of newsprint with a very fast turnover rate. The stocks are valued at cost price or actual value, whichever is lower. Deduction is made for dead stock. Shares Shares intended for permanent ownership are posted in the balance sheet as fixed assets and are valued at cost price. Write-down in the event of an anticipated permanent decline in value is undertaken following individual evaluation of the particular investment. Fixed assets The acquisition cost of operating equipment with a permanent value is capitalized as an asset in the balance sheet. Fixed assets are valued at historical cost after deductions for business depreciation. Business depreciation is linear and is set according to an assessment of the technical and economic lifetime of each asset. The following depreciation periods are used: Moveable, fixtures and office macines are depreciated over 3 15 years Machines and plants are depreciated over 3 15 years Building sites and buildings are depreciated over years Direct maintenance of operating assets is posted to operating costs, while upgrading or improvements that increase future earnings capacity are added to the cost price of the operating assets and depreciated accordingly. Profit or loss on the sale of fixed assets is calculated as the difference between the sales amount and book value at the time of the sale. Profits are presented under "Other operating revenues" and losses under "Other operating and administrative expenses." Taxes Taxes consist of payable tax and change in deferred tax. Payable tax is calculated on the basis of the fiscal result, and the change in the deferred tax is calculated on the basis of the year s changes in tax-increasing temporary differences and tax-reducing temporary differences. Deferred tax in the balance sheet is calculated on the basis on temporary differences between fiscal and accounting assets and losses and allowance for carryforward at the end of the financial year. Tax-reducing temporary differences and losses and allowance for carryforward are offset against tax-increasing temporary differences that reverse in the same time period. Deferred tax assets consist of tax-reducing temporary differences and losses and allowance for carryforward that are not offset. Deferred tax assets are entered on the balance sheet as the Group is expected to have future earnings which mean that the assets are used. Tax positions of companies not included in the tax group are not offset. Net deferred tax assets relating to these companies are furthermore not entered in the Group s balance sheet. Goodwill Goodwill at acquisition is from 1998 divided between publishing rights as intangible assets and goodwill as a residual item in the accounts. The amortization period for these two items is different, although there was no regulation of amortization for earlier years in connection with the division. Pensions Pension costs and net pension obligations are included in the profit and loss account and balance sheet according to the Preliminary Norwegian Accounting Standard for Pension Costs. The pension commitments are calculated systematically over the average remaining earning time based on the employee s age, period of service, salary and future adjustment of salary, discount rate, future return on pension funds and actuary assumptions of mortality and voluntary retirement. Pension funds are valued at actual value. Pension funds and the accrued obligation are valued using estimates from the closing of accounts which are corrected each year in accordance with actuary calculations. Subsidiaries amortize deviations and estimate/plan changes according to the Standard s equalization method. Accordingly, an accumulated effect exceeding 10 per cent of the greatest value of the pension obligations and pension funds is posted systematically over the average remaining earning period.